Marketing and Procurement – Defining Common Ground

Last night I returned from the inaugural "ProcureCon for Digital and Marketing Services" event that was held in Ft. Lauderdale this week. This was a first-time event for ProcureCon, as well as for the industry; none among the many senior marketing and procurement people I asked knew of any other gathering that approaches the category from a procurement point of view. From a finance perspective, yes, but none with procurement and marketing in mind. The event was a smashing success, sold out (with 120 participants - all paying), and with really good content that I will get to in later posts. And that's not just my opinion. Participants also thought it was good, and long overdue for their industry. The audience came from regular procurement, marketing management, and creative agencies. BUT...I have some notes.

Time to move on. Let me kick it off by scolding both marketing and procurement for their attitudes, because they share a strong "us versus them" mindset that is not helpful. Both of you: get over it!

Love us - we're so special! Yes, marketing is unique in many ways in that it drives top-line revenue generation, and some areas are more art than science (not just the creative side but also how to translate the activities into something quantifiable and measurable) but it is still "just" a category which you can map out in a flowchart, tweak processes and steps, and even apply six sigma thinking to areas that are about operational efficiency and/or purely tactical in nature. Stop ignoring this reality!

Marketing needs to embrace a structured approach (where applicable) and appreciate that procurement is as happy as a puppy when you throw a ball when they get to process the heck out of something. Besides, I'd imagine that this line of work is quite boring when viewed by creative folks, so let procurement have at it!

Speaking of procurement, this is how marketing sees you:

Hammertime! Procurement, on the other hand, has clearly (according to the marketing people in attendance anyway) gone after this category carrying their big PPR (purchase price reduction) hammer and an "it works anywhere!!!" attitude/fervor that has royally miffed the marketing people. We're talking about raw emotions that you don't see outside of elections and football season. The marketing people have their EQ (emotional quotient) dials turned up almost to 11 - which is probably necessary to work in that field. So when the procurement team walks in the marketing door and says "I'm from procurement, and I'm here to help," they are received less warmly than a group of TSA agents visiting a frequent flier convention. There are exceptions to the rule, but suffice to say that some bridges need rebuilding, sometimes from nothing more than charred stumps.

The solution - well, the journey is long, and patience is needed. One step is clear: data! Either marketing is so focused on driving the next project, or maybe they instinctively shy away from analyzing past procurement performance; or maybe it reminds them of trying to analyze the effectiveness of their ad campaigns? Be that as it may, closing the loop on what was bought and what was contracted has to be moved up the list of priorities. If marketing can develop a finely granular set of data around what they buy (5-second national TV spot, etc.) and the pricing (with rebates, volume discounts, etc.) and also take the time to carry this through to requisitions and Pos, well, then procurement has been thrown a ball that will keep them productively engaged for a long time. The insights from the data (price points across agencies, business units, regions, products) combined with cycle times, quality, etc. should provide fodder for discussions for years to come.

Play ball! It became painfully clear during the conference how little work has been done in this area. When I brought this up, the reaction was one of incredulity: Oh, you're talking about spend analysis? In marketing? Yes, that's exactly what I mean! The opportunities for solution providers and practitioners in this area is substantial. So little has been done, and in many cases, the marketing budgets are massive.

Final takeaway - I strongly suggest that procurement focuses on getting marketing to document transactions, contracts, and POs better. Realistically, this is not a budget that you will ever control. You should be quite happy with shining a light on what goes on. At least for the first few years!

I'll close with another round of congratulations to Carina Kuhl and her team for yet another conference done well. I wouldn't be surprised if this event grows to overshadow other ProcureCon activities - all companies have a marketing budget, and both the relative immaturity (from a procurement perspective) and the need for marketing and procurement alike to learn the wicked ways of the other side makes this a great category to serve.

Totally agree! Marketing is one of the largest discretionary spend categories and represents a target to zero-in on by the financial stewards of the organization, especially in tough economic times.
For survival, Marketing must open their doors and join forces with Procurement to improve cost efficiencies, stretch budgets and achieve more for less from existing relationships.
Equally, Procurement must get the buy-in from Marketing and understand their process and relationships before making heavy-handed moves (this category isn’t as straightforward to manage as other indirects such as office consumables, utilities, telecoms and IT), ….alternatively, Procurement will be left in the wings administering purchase orders, or a mandate from senior management will state that it has to happen so that a ‘soft’ buy-in approach isn’t needed!